You are here
MineSite cites GATA presentation at Vancouver show
The Greater Depression And The Greater Fool Theory Take Centre Stage At The World Resource Investment Conference In Vancouver
By Our Canadian Correspondent
MineSite.com
Thursday, June 11, 2009
http://www.minesite.com/nc/minews/singlenews/article/the-greater-depress...
the-greater-fool-theory-take-centre-stage-at-the-world-resource-investmen/1.html
The pundits supplied a mixture of doom and gloom, with a sprinkling of optimism thrown in for good measure, during this year's World Resource Investment Conference, held in Vancouver June 7 and 8. Some 125 exploration and service companies plied their wares during the two-day event and a bevy of so-called resource experts made their calls on the future of the resource market.
Similar to the past few years, all attendees and speakers seemed to agree that the place to be on the investment front is in gold. Following in that vein, multiple convincing cases were made about the fall of the United States dollar and its inverse relationship with gold.
The Gold Anti-Trust Action Committee, also known as GATA, made a strong case for collusion among financial institutions to suppress the price of gold, while the very popular Doug Casey made his case for the "Greater Depression." The self-proclaimed libertarian believes the biggest risk is the implementation of strict government regulations that will strip wealth from the rich as the standard of living plummets. His suggestion is to diversify political risk by having hard assets in multiple political jurisdictions, with the favorites being Argentina and Thailand.
Well-known commentator Paul Van Eeden took the scientific approach by using regression analysis to predict metal prices, and the outcome was far from rosy. Van Eeden sees bottoms forming for silver at US$6.75 per ounce, copper at US$1.20 per pound, and gold falling to US$815 per ounce. Others took a more optimistic stance that the falling United States dollar combined with growth in China and India will continue to support commodity prices. The leader on the base metal side will be copper.
Despite these somewhat negative projections for the overall economy and stock markets, the talk on the floor of the show was the partial unthawing of speculative money flowing into the more junior end of the market. Notably mentioned was Underworld Resources and its C$14.5 million financings. Rumours were swirling that the Adrian Fleming-led junior was offered a financing of up to C$50 million but elected to limit the shareholder dilution with more drill results pending from its White Gold project in the Yukon.
On the exploration side, Darren Bahrey's Oro Gold was mentioned by several well-heeled explorationists as possibly having a tiger by the tail at its Taunus target on the Trinidad gold property in Mexico. Despite not being in attendance at the conference, recent results like 5.2 grams gold per tonne over 36.5 metres within a larger zone running 3.4 grams gold per tonne over 60.6 metres make this one to watch throughout the summer.
Over to silver where the smaller producers are starting to shine. Bob Archer, CEO of Great Panther Resources, painted a rosy picture for his company after it posted its first positive cash flow from its Mexico operations during the first quarter of 2009. But not to be outdone, the VP of Corporate Communications for Endeavour Silver, Hugh Clark, made a case for rapid production growth at Endeavour's Mexican operations. Endeavour is expecting a 20 per cent jump in output to 2.9 million ounces of silver in 2009.
Two other companies that seemed to garner more than their fair share of attention were Eurasian Minerals and AuEx Ventures. Eurasian has projects in Turkey, Kyrgyzstan and Eastern Europe, but it is its Haiti assets that seem to be at the forefront. The David Cole led company has a Joint Venture and Regional Strategic Alliance with Newmont covering the La Miel gold project in northern
Haiti. Most recently Eurasian has been pulling out some nice surface numbers on the Treuil project where the discovery of the Chardonnay and Bordeaux high-grade
copper-silver-gold prospects returned an average grade of 4% copper and 2.66% copper respectively.
Finally, AuEx is a Nevada gold play with a 49 per cent interest in the Long Canyon gold deposit. Fronteer Development Group holds the other 51 per cent. The first ever resource estimate came in at 2.5 million tonnes grading 4.01 grams gold per tonne in the indicated section and 3.6 million tonnes grading 3.16 grams gold per tonne in the inferred category. Despite the fact that the tally is less than one million ounces of contained gold, the favourable metallurgy and expansion potential to develop a new gold district curried a lot of favour with prospective investors.
So there you have it. The attendees tended to shrug off the doom and gloom of most of the so-called experts and went shopping for the junior companies with the most potential to generate healthy returns. Only time will tell if purchasing speculative exploration companies at this stage of the economic cycle is a prudent decision or a classic example of the greater fool theory, which is essentially buying something not because you believe that it is worth the price, but rather because you believe that you will be able to sell it to someone else for an even better price.
* * *
Help keep GATA going
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
To contribute to GATA, please visit:
